Rayner Urges Stronger Regulation of Managing Agents
Former Housing Secretary Angela Rayner has called on the government to enhance regulation of managing agents as part of ongoing reforms to the leasehold system in England and Wales.
Addressing MPs on the Commons Housing Committee, Rayner commended the government's draft legislation for striking
"the right balance"between challenging
"vested interests"and implementing changes swiftly.
However, the former deputy prime minister emphasized the need for ministers to advance proposals for an independent regulator and to introduce measures that would increase transparency around service charges.
The government's draft leasehold bill is currently under review by the committee before progressing through Parliament.
This legislation proposes capping ground rents—annual fees leaseholders pay to freeholders—at £250 per year. It also seeks to prohibit the sale of new leasehold flats and to grant homeowners greater authority over building management.
Despite these provisions, the bill does not include specific regulations for managing agents or address the issue of rising service charges.
Many leaseholders have expressed concerns about unjustified service charges, which they are obliged to pay without having control over the management and maintenance of their buildings.
The government has stated its commitment to regulating managing agents and is considering introducing mandatory professional qualifications. It has also consulted on measures to prevent managing agents from imposing opaque and excessive charges related to building insurance, often through commissions.
There are approximately five million leasehold homes in England and Wales, where residents own the right to occupy a property for a limited term under a lease from a freeholder.
Rayner, who served as housing secretary until September last year when she resigned over a tax issue related to a flat purchase, described the lack of managing agent regulation as
"a real problem". She urged the government to
"go further and harder"on Lord Best's 2019 proposals to establish an independent regulator.
She also stressed the importance of swift action to implement measures from the 2024 Leasehold and Freehold Reform Act, passed under the previous Conservative government, including enhancing transparency of service charges and building insurance policies.
Rayner added that she was aware the housing minister intended to address these issues
"with expedience".
Overall, she praised the bill as a
"gamechanger for people who have waited far too long for action to be taken".
Lord Gove Supports Bill but Notes Resistance
Speaking alongside Rayner at the committee, former Conservative Housing Secretary Lord Gove, who oversaw the 2024 leasehold act, acknowledged
"many good things to welcome"in the government's draft bill.
However, he highlighted ongoing opposition, stating the housing secretary had been
"fighting against a rearguard action mounted by the freeholders and other financial interests and supported by the Treasury".
He added,
"I witnessed that myself when I was in government, and I think that the institutional resistance of the Treasury remains."
The draft legislation proposes reducing ground rents to a peppercorn rate, effectively zero, after 40 years. Lord Gove expressed a preference for a faster timeline of 20 years, describing ground rents as
"essentially extortion".
Concerns Raised by Freeholder Representative
Earlier in the committee session, Charmaine McQueen-Prince, chair of the Residential Freeholder Association, voiced
"deeply concerned"about potential
"unintended consequences"of the draft bill.
She warned that capping ground rents could render freeholders insolvent, jeopardizing their ability to fulfill obligations such as ensuring fire safety and removing dangerous cladding.
McQueen-Prince also noted that pension funds investing in freeholds could be adversely affected, potentially damaging investor confidence in the UK due to the retrospective nature of the changes.
Lord Gove dismissed these concerns as
"bogus", pointing out that less than 1% of pension fund investments are in UK residential property and asserting that investors consider multiple factors when evaluating the UK's attractiveness.
Rayner on Government's Approach to Ground Rent Caps
Prior to the publication of the draft legislation, Rayner urged the government to honor its election commitment to cap ground rents amid fears that lobbying by freeholders might lead to the pledge being dropped.
She explained that the government aimed to
"strike the right balance to get this over the line"by gradually reducing ground rents to a peppercorn rate over 40 years, rather than implementing an immediate cap as some campaigners advocated.
Nonetheless, she cautioned that moving too slowly could give the impression that
"the vested interests win over the will of the people".
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